Calendar No. 939. 


64th Congress, ) 

SENATE. 

j Repoet 

2d /Session . j 


( No. 1046. 


retirement of employees in the classified 

CIVIL SERVICE. 


February 13, 1917.—Ordered to be printed. 



Mr. Pomerene, from the ^Committee on Civil Service and Retrench¬ 
ment," submitted the following 

REPORT. 


| ~l — 2 . 0 2 —. 2 - 1 


[To accompany S. 3079.] 


The Committee on Civil Service and Retrenchment, to whom 
was referred the bill (S. 3079) for the retirement of employees in the 
classified civil service, having considered the same, report the bill 
back with sundry amendments, and as so amended recommend that 
the bill do pass. 

At the present time there are about 250,000 employees of the 
Government in the competitive classified civil service. About 5,000 
are 70 years of age or over. Their number is increasing. Heads of 
departments for many years have advised the adoption of some 
system of retirement. Three plans have been suggested: 

First. Pensions to be paid wholly by the Government. 

Second. Pensions to be paid partly by the Government and partly 
by contributions from the employees. 

Third. Pensions to be paid wholly by contributions from 
employees. 

Without attempting to go into the arguments for or against these 
various plans, it is sufficient to say, for the purposes of this report, 
that your committee is of the opinion that it would be unwise to 
adopt any plan which will not be ultimately self-sustaining. 

For many years efforts have been made to improve the efficiency 
of the service in the different departments. One of the principal 
difficulties in improving conditions is the large number of super¬ 
annuated men and women who have been in the departments for 
many years, and who, largely because of advancing years, have not 
been' able to perform a reasonable amount of service for the compen¬ 
sation paid. At times, efforts have been made by the heads of 
departments to replace employees whose work did not measure up 
to a certain degree of efficiency. To those who have made these 
attempts it has proven a thankless task. Everyone in the Govern- 















2 


RETIREMENT OF EMPLOYEES IN THE 


■ W 

CLASSIFIED CIVIL SERVICE. 


ment service ought to give value received for his pay. That most 
of these employees who have become superannuated are not earning 
the money they are receiving is apparent to anyone familiar with the 
public service. Many of them perhaps have no means of support 
outside of their salaries. To turn them out into the cold world 
without some provision for their declining days would be indeed cruel. 
To retain them after they have fallen below a certain degree of effi¬ 
ciency is demoralizing to the public service. Clearly, it is not just 
to the Government to retain in the service in the several grades of 
employment men and women who are only 50 per cent or 25 per cent 
efficient, or less, and it is not just to the other employees who are 
performing their full share of the work and often receiving less com¬ 
pensation. The same labor should receive the same pay. 

For the present condition both Congress and the administrative 
branch of the Government are to blame. The Congress has con¬ 
tinued to make appropriations for the pay of these superannuates, 
well knowing that, many of them were not earning the money they 
were receiving. The administrative branch of the Government, 
though clothed with the power to remove all who were not proving 
efficient, has hesitated, for humanitarian reasons largely, and pos¬ 
sibly because of political pressure, to discharge those who have grown 
old in the public service. 

The Committee on Civil Service and Retrenchment, after long and 
thorough study of this subject, have decided to report favorably 
Senate bill 3079, with amendments as indicated. 

In brief, the bill provides that there shall be deducted monthly 
from the pay of every officer or employee in the competitive classi¬ 
fied service, except postmasters, amounts computed to the nearest 
tenth of a dollar which will be sufficient, with interest thereon at 4 
per cent per annum, compounded annually, to purchase from the 
United States an annuity payable quarterly throughout life, but the 
assessment shall not exceed 8 per cent oi the pay. This amount 
varies so as to correspond to tne rate of pay. The annuity shall 
equal one-half of the annual salary received since July 1, 1912, but 
shall not exceed $600 per annum. The amount deducted from each 
salary is to be credited to the separate account of the contributing 
officer or employee, with interest thereon at 4 per cent per annum, 
compounded annually, and must be invested in bonds of the United 
States, Federal farm loan bonds, or other interest-bearing obliga¬ 
tions of any State, county, or municipality in the United States. 

It is estimated by Mr. Herbert D. Brown, Chief of the Bureau of 
Efficiency, that the assessments to purchase these annuities will be 
approximately as follows: 


Age: 


20 

25 

30 

35 

40 


Per cent. 
.. 3 

.. 4 

.. 5 
.. 6.5 
.. 8 


Age: Percent* 


45. 


50. 


55. 


60. 



These percentages of deductions may vary slightly, depending 
upon the mortality tables finally adopted by the Secretary of the 
Treasury for his guidance in administering this law. 

The limitation of 8 per cent upon assessments applies to those now 
in the service, as well as to those who enter hereafter. These deduc- 


D® of D. 
FEB 24 1917 












retirement of employees in the classified civil service. 3 


tions will be sufficient to pay an annuity to each officer or employee 
equal to one-half of his salary, with a maximum of $600, who is under 
40 years of age, but those who enter the service hereafter and are 40 
years of age or older will be entitled only to such annuities as these 
deductions, together with accumulated interest thereon, will buy. 

All officers or employees are to be retired at 70 years of age unless 
within 30 days before reaching the retirement age the head of the 
department or independent office shall certify to the Secretary of the 
Treasury that because of efficiency and willingness to remain in the 
service a further continuance of such officer or employee would be 
advantageous to the Government, he may be retained for a further 
period not exceeding two years and for a second period of two years. 
After this time his employment ceases entirely. 

Should the officer or employee desire to leave the service at any 
time prior to the age of 60 years, he is permitted to withdraw his 
savings in one sum, with accumulated interest thereon. At any time 
between 60 and 70 years of age he can retire upon such annuity as 
his assessments and accumulated interest thereon may purchase. 

If the officer or employee should die at any time before receiving hi 
annuities a sum equal to his accumulated savings and interest thereon, 
the balance remaining to his credit will be paid to his legal representa¬ 
tives. 

If he leaves the service and again reenters, the monthly deductions 
shall be computed from his age at the date of reinstatement, unless 
within 90 days thereafter he pays to the Treasurer of the United States 
the amount refunded to him, which shall apply toward the purchase 
of his annuity, and the deductions from his salary thereafter will be 
only for such sums as may be necessary to pay for the balance of said 
annuity. 

In order to be entitled to the full annuities, he must have been 
20 years or longer in the service. Those who reach the retirement 
age and have not been in the service for 20 years shall be entitled to 
one-twentieth of the annuity for-each year of service rendered by 
him. 

It will be noted that under the proposed plan the young are not 
insurers for the old nor the strong for the weak. A separate account 
is kept with each individual for the benefit of himself and his family. 
It combines both a compulsory savings and a pension plan. It en¬ 
courages thrift and provides for old age, and we believe it will improve 
the morale of the service. 

The total cost to the Government for the first year will amount to 
approximately $2,750,000 if all 70 years of age and over retire at 
once. This annual cost to the Government will increase steadily for 
about 25 years, when it will reach a maximum of between $6,000,000 
and $7,000,000. It will thereafter decrease gradually until, at the 
end of about 50 years, it will cease entirely, and the system will be 
self-sustaining. 

However, in estimating the total cost to the Government we must 
remember two facts: 

First. We are retiring the old and inefficient and replacing them 
with younger and more active employees, and the saving on salary 
account will be substantially enough to pay the cost to the Govern¬ 
ment of the annuities. 




4 RETIREMENT OF EMPLOYEES IN THE CLASSIFIED CIVIL SERVICE. 

Secondly. With each succeeding year the deductions made from 
salaries will form a larger part of the cost of the annuity until, at the 
end of 50 years, the deductions will pay all accruing annuities. 

To make this appear more clearly, we beg to remind the Senate that 
appropriations are now being made for those who have passed the 
retirement age. This includes about 5,000 officers and employees 
who are 70 years of age and over. Many of these are only 50 per cent 
efficient, some 25 per cent efficient, and others wholly inefficient. The 
salaries of these employees average about $1,160 each, amounting in 
all to about $5,800,000. Upon their retirement their annuities for 
the first year will be paid out of the appropriations made for their 
salaries. These annuities will average about $550 each, or a total of 
about $2,750,000. Under the provisions of the bill 10 per cent of 
these salaries thus appropriated, amounting to $580,000, will be 
covered into the Treasury. This will leave a balance of $2,470,000 
to be applied, if necessary, for the employment of new clerks at the 
lower grades. This balance of $2,470,000 would be sufficient to 
employ about 2,500 persons at annual salaries of from $900 to $1,000 
each. 

Present conditions in the civil service, due in large part to super¬ 
annuation, have become ahnost intolerable, arid each year they are 
growing worse. No system that can now be devised will be free from 
objection, if not by employees, certainly by the public at large whose 
servants we are. The plan hero rccommendea represents our best 
judgment. It will certainly relieve the departments of the inefficient 
employees, establish the principle of retirement, and if we take into 
consideration the improvement of the service it will compensate the 
Government for any increased cost occasioned thereby. Future 
Congresses can amend the law as experience may require. 


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